In a sluggish economy or an outright recession, it's best to watch your spending and not take undue risks that could put your financial well-being and goals in jeopardy.

Below are several specific financial risℱks that you should avoid taking during a recession.

1. Co-Sign a Loan

Co-signing a loan is a risky commitment even in flush economic times. If the borrower does not make the required payments, the co-signer will be required to make them ins🐼tead.

During an economic downturn, the risks a❀ssociated with co-signing on debt are even higher, since both the borrower and the co-signer may face an eleva𒈔ted likelihood of losing a job or a decline in business income.

That said, you may find it necessary to co-sign for a family member or close friend regardless of what is happening in the economy. In such cases, it pays to have some savings set aside as a cushion. Or, instead of co-signing, you might help with a 澳洲幸运5官方开奖结果体彩网:down payment or make a 澳洲幸运5官方开奖结果体彩网:personal loan rather than leaving yourself on thℱe hook for a co-signed loan.

2. Get an Adjustable-Rate Mortgage (ARM)

When purchasing a home, you have the choice of an 澳洲幸运5官方开奖结果体彩网:adjustable-rate mortgage (ARM) or a 澳洲幸运5官方开奖结果体彩网:fixed-rate mortgage.

澳洲幸运5官方开奖结果体彩网:Interest rates usually fall early in a recession and then rise later as the economy recove🔥rs. This means that the adjustable rate for a loan taken out during a recession is likely to rise once the downturn ends. The fixed-rate loan at recession pricing could be a better deal in the long run.

Considꦡer the worst-case scenario: You lose your job and interest rates rise as the recession starts to abate. Your monthly mortgage payments go up, making it extremely difficult to keep current on the payments. Late payments lower your credit rating, making it more difficult to obtain a loan in the future.

A recession may be a good time to lock in a lower fixed rate on a mortgage refinance if you qualify. However, be cautious about tak𝔍ing♐ on new debt until you see signs that the economy is recovering.

3. Assume New Debt

Taking on new debt—such as a car loan, 澳洲幸运5官方开奖结果体彩网:home equity line of credit (HELOC), or student loan—need not be a prob🦹lem in good times when you can make enough money to cover monthly payments and still save for retirement.

But when the economy takes a turn for the worse, the risk that you will be laid off or lose business income increases. If that happens, you may have to take a job—or jobs—that pay less than your previous salary, which could eat into your 澳洲幸运5官方开奖结果体彩网:ability to pay your debt.

Taking on new debt in a recession i♉s risky and sh൩ould be approached with caution. Pay cash if you can, or wait on big new purchases.

4. Take Your Job for Granted

During an economic slowdown, even large corporations can co൲me under financial pressure, leading them to look for cost cuts. All too often, that means layoffs.

Because 澳洲幸运5官方开奖结果体彩网:jobs become so vulnerable du🤡ring a recession, workers can’t take finding another one for granted, so it is wise to think carefully before leaving a job when the economy is in a rough patch.

In addition, older workers retiring during a recession could see their income decline and their retirement portfolio suffer just as they start to draw it down. If the economy is 澳洲幸运5官方开奖结果体彩网:tumbling as you near retirement age, it’s important to weigh your options. You might decide to hang in there for another year or so.

5. Make Risky Investments

This tไip applies to business owners. While you🤪 should always be thinking about the future and ways to grow your business, an economic slowdown may not be the best time to make risky bets.

Early on in a recession is not the time to stick your neck out. Later, once the economy starts to show siꦑgns of a sustainable recovery, it will be time to start thinking big. 

Borrowing to add space ✱or increase inventory may sound appealing—particularly since interest rates are likely to be low during a recession. But if business slows down more—as it may during a recession—you may struggle to make the payments on your debt.

Wait until interest rates st🐎art to tick upward and leading economic indicat𝕴ors for your market or industry turn up.

The Bottom Line

There’s no need to panic in response to an economic slowdown, but you should pay extra attention to your spending and 澳洲幸运5官☂方开奖结果体彩网:be wary of taking unnecessary risks.

Even in the midst of a significant economic downturn, there are many positive steps you can take to improve your situation and 澳洲幸运5官方开奖结果体彩网:recession-proof your life. These include adopting a realistic budget, establishing an 澳洲幸运5官方开奖结果体彩网:emergency fund, anꩵd generating additional sources of income if necessary🌺.